Reed is the founder of 1960s subculture rock band The Velvet Underground and is also well-known for his 70s hit Walk On The Wild Side.

Anderson - an experimental performance artist - rose to fame with the hit single O Superman.

Vivid will be the first time the pair join creative forces, taking over the reigns from last year's curator Brian Eno.

Previously known as Luminous, the festival's focus is on live performances, while also taking in the illumination of the Sydney Opera House and Macquarie Street, the Song Summit and discussion and debate as part of Creative Sydney.

In its inaugural year - 2009 - the festival attracted more than 200,000 people to The Rocks and Circular Quay. Twenty thousand were from interstate or overseas.

An estimated 60 million people in 200 countries worldwide also viewed broadcasted images of the Opera House light display.

New South Wales Premier Kristina Keneally says the addition of major events like Vivid are growing in popularity and bringing people to experience the city in new ways.

"What we know of Vivid Sydney last year, people came to the Opera House who had never been here before. And that's a great thing for Sydney, it's a great thing for our cultural icons."

Speaking on a pre-recorded video package, Anderson said audiences could expect a mix of experimental theatre, dance, music and comedy this year.

"For me, the point of festivals is to present a lot of things that you wouldn't necessarily go to... It just gives people the chance to jump off their street a little bit and check out some other things," she said.

"The 'live' part for me is really exciting. I am more and more interested in things that can only be done live - and making them vivid actually."

Reed says he is excited by the opportunity to curate a festival with his wife.

"I like the idea that it's bringing people to Sydney that they wouldn't probably normally have a chance to see and hear. I think it's really fun and exciting," he said.

Geoff Parmenter, Events NSW CEO, says the mystery about what Reed and Anderson will put together is part of the thrill of the festival.

"All we know is that if we're keen to create a festival that's about showcasing Sydney as the creative capital of Australia and the region, that when you put two individuals like that together, you're going to get creativity in spades," he said.

"I think that what's really at the heart of this festival concept is live creativity - and from what they've said during the process of their recruitment, they're 110 per cent committed to just that."

He says this year's festival will build on the success of 2009 and become a prominent part of Sydney's creative calendar.

"We see Vivid as being a critical, high-value anchor event in Sydney's calendar for years to come. Something that has been built and is owned by Sydney, [it] can't be bid away and will drive those visitors and those dollars and that image of Sydney around the world for many years to come."